Rule 15c3-3 has two halves. The possession-and-control half says fully paid and excess margin securities must sit in approved locations, such as dtcc, and cannot be lent or pledged by the firm. The reserve half runs a formula comparing what the broker owes customers to what customers owe it, and any net credit must be deposited into a special reserve bank account for the exclusive benefit of customers.
The reserve computation is performed weekly for most firms and daily for large ones. The point is that a broker should not be financing proprietary activity with customer cash, so if customers are net creditors the difference is locked away.
When a broker fails, this rule is what usually makes a clean transfer of accounts possible and keeps sipc from having to write a cheque. Failures of segregation, not trading losses, are the typical cause of customer shortfalls.
Related: rule-15c3-1, sipc, customer-segregated-funds, rehypothecation, clearing-broker